No Seller Wants Cash – EVER!

Just got a call from a realtor. She represents a homeowner who needs a quick sale. The realtor said, “Bill, my client will only consider an all-cash offer. We’re not interested in any of your creative razzle-dazzle deal structures, understand?”

Kim and I get a lot of calls like this. I’ve learned not to say, “No seller wants cash – EVER – ya dingbat!” Saying such would ruin the relationship and destroy the possibility of meeting face-to-face with the seller.

So what do you think? Do sellers really want cash or could I possibly be right?

In this situation, what if I immediately agreed to pay the seller’s $80,000 asking price – in cash? There’s only one condition: The seller must put the $80,000 on her kitchen table, cover it with plastic wrap, and agree that once a month the seller, realtor and I will get together and marvel at the big stack of money.

Sure, this is a silly stipulation that no seller would agree to. But why – since the seller is getting exactly what she wants – wouldn’t she agree to it? Think hard on this. It’s an important question to contemplate!

Maybe you say the seller is gonna put the money in the bank because it’s safe there. But is it? Right now banks are paying 0.5% interest on deposits. But with the current 4% rate of inflation, the seller’s money’s buying power is actually shrinking by 3.5% per year. You call this safe?!?

Maybe you say the seller is gonna use the money to buy another house, or a car, or go on a nice vacation. And this is my point! The seller doesn’t want cash. The cash is simply a conduit that allows the seller to get rid of something she no longer wants (her house), and get something she wants more (another house, a car, a nice vacation.)

Here’s another way to look at it. The seller is using what she has (her house) to get what she needs (cash) to get what she wants (another house, a car, a vacation.) Again, cash is just a conduit; it’s not what she really wants!

What if I can help the seller get rid of what she has and get what she wants – without using cash as the conduit? Might the seller say yes?

Here’s a deal we did last year that shows this creative deal structure in action. We met a lady who had a house in a neighborhood in Woodstock, Georgia. Problem was, she wanted a home in the country, but because of poor credit she couldn’t qualify for a mortgage. She needed to first sell her house and then use the cash to buy a country home.

We also knew an investor who wanted to sell a house in the country because it was too far away from everything. We brought the two together and they simply traded houses. They both got what they wanted and we got $10,000 from the investor for facilitating the deal!

Remember, there are a thousand ways to buy a house – cash is only one of them! Bottom line: When sellers tell you they want cash, they’re lying. Their goal is to use the cash to trade for something they want more. Your job is to find out what that thing is and then help them get it.

How do Kim and I get owner financing when we buy a house? We explain to the sellers that we’d gladly pay them 5.0% compounding interest secured by the property, which is a whole lot more than the miserly 0.5% interest that a bank would pay them if we gave the sellers cash for their house and they put that money in the bank.

Folks, I learned all of this from Pete Fortunato, the best creative deal structurer we know. We’re bringing him to Atlanta to teach in September. See http://atlantareia.com/?p=27877 to learn more!

Bill & Kim Cook are a husband and wife real estate investing team. They live in Adairsville, Georgia and have been investing in real estate since 1995. They specialize in buying single-family homes, mobile homes and mobile home parks. They also run North Georgia REIA and teach folks how to successfully invest in real estate.